New York Sports Clubs Owner Drops Flywheel Deal, New Financing

(Bloomberg) -- Town Sports International Holdings Inc. terminated its agreement to purchase Flywheel Sports Inc., complicating the New York Sports Clubs owner’s plans to refinance a loan coming due this year.

The fitness chain, which also runs sports clubs in Boston and Washington dropped an asset purchase agreement to acquire all of Flywheel’s spin-studio business, according to a company filing. As a result, Town Sports said, $50 million in loans associated with the merger and provided by Flywheel’s owner, Kennedy Lewis Investment Management, will no longer be made.

Both Town Sports and Flywheel’s fitness centers are among those that have been closed during shelter-at-home policies in virus-hit regions.

Town Sports, with 600,000 members, had planned to use part of the new debt to help refinance a $193 million loan due in November and push out its maturity to 2024. The loan is has been trading for around 37 cents on the dollar, prices compiled by Bloomberg show.

Before its proposal in January to buy Flywheel, an indoor cycling club with 300,000 members, Town Sports hadn’t outlined a plan to repay it, according Moody’s Investors Service and S&P Global Ratings. The deal would have eliminated near-term refinancing risk for the company, S&P wrote in January.

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